AIM-listed Gaming Realms creates and licenses online gambling games for mobile, with operations in the UK, US, and Canada.
The company is just getting started in newly-regulated states in the US and expansion further afield into Canada and multiple European countries are very much on the commercial horizon, said the broker.
But that’s if it gets that far.
In a subsector with a high level of mergers and acquisitions (M&A), a takeover seems increasingly likely, said Peel Hunt.
Even without accounting for that possibility, the broker has a 60p price target and “buy” recommendation, which it said is underpinned by the trading prospects.
In the first half of 2021 revenue growth was 50%, which Peel Hunt is confident can be maintained into the full-year results and beyond.
The compound annual five-year growth rate (CAGR) in earnings before income, tax, depreciation, and amortisation (EBITDA) will be 32% between the full year 2021 and the end of 2025, predicts the broker.
The continued growth, multiple expansion that comes with increased credibility, and the potential for a takeover makes this stock attractive, it concluded.
Shares eased 0.3% to 31.8p.